Supreme Court Limits Companies’ Ability to Pick-Off Class Action Plaintiffs

If a defendant offers to settle a class action plaintiff’s individual claims in full, but the plaintiff rejects the offer, is the class action moot?

In Campbell-Ewald Co. v. Gomez (Case No. 14-857), the plaintiff brought a class action consumer protection lawsuit under the Telephone Consumer Protection Act (TCPA) against a government contractor. Prior to class certification, the defendant extended a settlement offer to the individual named plaintiff which would have provided full relief of the plaintiff’s claims. The plaintiff refused the offer. The defendant argued that the settlement offer mooted the plaintiff’s class action claims because it provided him with complete relief, even though the offer was rejected.

The Supreme Court said no. “An unaccepted settlement offer has no force,” wrote Justice Ruth Bader Ginsburg. In the January 20, 2016 decision, the Supreme Court ruled that defendants cannot quash class action lawsuits by offering to settle the named plaintiff’s individual claims if the named plaintiff rejects the offer.

Although Campbell was not an employment law case, its holding has strong positive ramifications for employees. By this ruling, the Supreme Court has protected employees who bring class action lawsuits to protect the rights of not only themselves but other similarly situated employees who have also faced violations but may not be able to file suit on their own. This is particularly important in wage and hour lawsuits, where the damages might be relatively low for the plaintiff and class members individually.

However, Campbell does not close the book on this issue altogether. Justice Ginsburg limited the ruling to the specific facts of a case: where complete relief is offered to a class action named plaintiff and rejected. Justice Ginsburg noted:

“We need not, and do not, now decide whether the result would be different if a defendant deposits the full amount of the plaintiff’s individual claim in an account payable to the plaintiff, and the court then enters judgment for the plaintiff in that amount. That question is appropriately reserved for a case in which it is not hypothetical.”

This term, the Supreme Court will decide another issue that could greatly impact the ability of employees to maintain class action lawsuits. In Tyson Foods v. Bouaphakeo (Case No. 14-1146, argued Nov. 10, 2015), the plaintiffs are factory workers who allege they were not paid sufficient overtime pay, particularly for time they spent putting on and taking off certain protective clothing. In Tyson Foods, the Supreme Court is set to decide what proof is sufficient in order to sustain class action status where the class members’ potential damages must be statistically averaged because an employer failed to keep adequate records.

The attorneys at Hunter Pyle Law have handled many types of employment class actions, from pre-litigation resolution through trial.  If you have questions about possible issues in your workplace, please feel free to contact Hunter Pyle Law at 510.444.4400 or inquire@hunterpylelaw.com.